Haddad Nadworny Sat, Jun 10, 2017 @ 08:04 AM 5 min read

Grandparents Gifts to an ABLE Account

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP, ChSNC | Alexandria  Nadworny, CFP, CTFA

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Updated June 30, 2021


cane-elder-elderly-33786The ABLE account provides grandparents with the opportunity to gift to their grandchild with a disability in the same manner as they contribute to their typical grandchild's 529 account. 

Case Study: Generous Grandparents 

The Situation:

Our client has a strong belief in higher education and set the goal of establishing educational accounts for each of their grandchildren soon after they are born. They have just celebrated the arrival of their third grandchild. However, this beautiful baby boy was born prematurely and with significant health issues which will likely cause developmental delays.  It is already known that his hearing has meaningful, and perhaps total, impairment. 

Options to Consider:

While the ABLE account is an option for these generous grandparents to consider, they must be mindful of some of the limitations of the ABLE account that do not apply to 529 accounts. These limitations include:

  1. An individual may only own one ABLE account. In this case, if our clients opened an ABLE account for their grandson, his parents or his other grandparents would NOT be able to open a separate ABLE account for him. 
  2. They are allowed up to the $15,000 contribution limit (2021) to fund the ABLE account.
  3. If the balance in the ABLE account exceeds $100,000, the individual's Supplemental Security Income (SSI) eligibility is impacted. 

Another option for our clients to consider is to gift the funds directly to their grandson's parents and have them specifically earmarked for the benefit of this grandchild.

Should the grandparents want to take a further step in gifting, they may want to explore the option of creating a Supplemental Needs Trust (also known as a 3rd party Special Needs Trust) and purchasing life insurance on their lives to fund the trust upon their death(s). 

These are a few common strategies we discuss with families.  There are additional strategies and considerations grandparents may wish to explore with their team of legal and financial advisors to determine the most appropriate option to gift to their grandchild with special needs.

For more information, please visit the ABLE Account and Special Needs Planning


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes.

The experiences described here may not be representative of any future experience of our clients, nor considered a recommendation of the advisor's services or abilities or indicate a favorable client experience. Individual results will vary.

Investing involves risk including loss of principal. Prior to investing in an ABLE account, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits available for investments in such state’s ABLE program.